Europeans, and particularly Brits, continue to give Xbox 360 aid to poor America

Microsoft officially announced the rumoured $50 price cut for all Xbox 360 models yesterday:

REDMOND, Wash. — Aug. 6, 2007 — Microsoft Corp. today kicked off the greatest holiday lineup in video game history by announcing it will reduce the retail price of Xbox 360™ by $50 (U.S.) beginning Aug. 8 at United States retailers nationwide.

However, Microsoft’s stratagem has not been extended worldwide. IGN UK elicited this official response regarding a European price cut:

“This announcement was specifically around pricing in the US. We have not announced any pricing changes in Europe.”

Unlike the PlayStation 3 and the Wii, Microsoft is succeeding in only two basic markets: the US and the UK. Japan and mainland Europe have been far more reluctant to embrace Microsoft’s largely excellent sophomore console. The following figures are from www.vgchartz.com for the week ending 5th August 2007.

  • America: 6.61 million
  • UK: 1.2 million
  • Rest of Europe: 2.05 million
  • Japan: 0.42 million

If I wanted to accelerate growth of a market, I would be concentrating on Europe and Japan.

Thanks to their method of stiffing Europeans and Brits in particular with regard to price, here in the UK we contribute an extra $170 or so for every Xbox 360 we buy compared to America. In the UK, the full system costs £280 or $570. In France, the full system costs €400 or $550. In America, it costs $400 (before this price cut).

This means that Europe subsidises American Xbox 360 consoles so that they could reach the magic $399 launch price point. Especially at the beginning of its cycle, it cost Microsoft more than $399 to manufacturer and ship an Xbox 360 but their overage (reckoned at this time to be $80) was covered by our price ($570) which included both the proper price of the console ($399 + $80) and the American subsidy ($80).

While I imagine it is highly likely the Microsoft will drop the European price at some point in the future, probably midway between the 360 Elite launch at the end of August and Christmas (at the UK only X07 replacement conference), they are keeping the high European price point for the time being. The reason? Could it have anything to do with needing to find cash to pay for the (anecdotal) reported one third of Xbox 360’s that need repairing?

Slimm Says

We in Europe can take comfort from the fact that we are clearly helping our transatlantic chums in their hour of gaming need.

5 thoughts on “Europeans, and particularly Brits, continue to give Xbox 360 aid to poor America

  1. Ah, I understand the exchange rate comment now. Thanks.

    I still feel that Microsoft should be reducing prices worldwide within weeks of each other and should be giving Europeans a bit more love. At least Sony is expensive everywhere.

  2. I think you missed my point a bit: you can’t include the portion of the price which goes in tax as part of the ‘subsidy’, and the price MS receives per XBOX sold in the UK is clearly significantly less than the amount you are using in your calculation because resellers like GAME, Amazon and Play can afford to bundle in a game or two.

    My point about the change in currency exchange rates is that the prices were set back in 2005, when the £238 price of the 360 was $418 dollars, less than the current ~$480.

  3. For my comparison I took Microsoft’s Recommended Retail Prices. The dollar / euro /gbp conversions quoted were as of August 7th, 2007. I believe the principle still holds with the point being that buying a 360 is much more expensive for Europeans than Americans and that Microsoft are making that gap yet wider.

  4. What a horribly inaccurate comparison. To start with, the 360 in the UK is £280 with a free game or 2 (go look on Amazon), while the US price is for the console alone. Then, the UK price includes VAT at 17.5%, so the price for comparison with the US is £238 (~$484). Also, the value of the dollar has dropped since the release of the 360.

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